How Does Offerpad Work? iBuyer Company Overview
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Dena Landon, Contributing AuthorClose
Dena Landon Contributing AuthorDena Landon is a writer with over 10 years of experience and has had bylines appear in The Washington Post, Salon, Good Housekeeping and more. A homeowner and real estate investor herself, Dena's bought and sold four homes, worked in property management for other investors, and has written over 200 articles on real estate.
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Richard Haddad, Executive EditorClose
Richard Haddad Executive EditorRichard Haddad is the executive editor of HomeLight.com. He works with an experienced content team that oversees the company’s blog featuring in-depth articles about the home buying and selling process, homeownership news, home care and design tips, and related real estate trends. Previously, he served as an editor and content producer for World Company, Gannett, and Western News & Info, where he also served as news director and director of internet operations.
Disclaimer: iBuyer company program details can frequently change. HomeLight always advises that you check a company’s website for the most up-to-date information.
If you’re planning to sell your home in 2024 — especially as mortgage rates remain high and the seller’s market of 2023 has retreated in the rearview mirror — you may be weighing the possibility of working with an iBuyer such as Offerpad and are curious to learn more about this option. So, how does Offerpad work?
Assuming you’re in a market where Offerpad operates and your home qualifies for one of its programs, you could receive a cash offer from the company in less than 24 hours. People searching for a home can also browse Offerpad-owned listings and work with one of the company’s transaction managers to make a purchase.
Get a Quick Cash Offer For Your Home Today
It’s difficult to sell a house, especially under the pressure of a deadline. Use HomeLight’s Simple Sale platform to sell when you’re ready without the hassle of paying for repairs, prepping for listing, or dealing with showings.
When selling to Offerpad, you skip many of the typical hassles associated with listing a home for sale, such as staging, showings, and open houses. Should you choose to accept an offer from Offerpad, you’ll pay a service fee amounting to 5% of the sale price.
While there are other iBuyers operating in the market, for the purposes of this article, we’ll focus specifically on how Offerpad works. We’ll also introduce you to some other potential real estate platforms to explore, such as HomeLight’s Simple Sale website, an additional “sell my house fast” solution for sellers to consider.
What is Offerpad?
Offerpad is considered an iBuyer. iBuyers (short for “instant buyers”) are well-funded proptech companies aiming to make the process of selling a home — along with other real estate challenges — easier to navigate.
Digital pricing tools
While house flippers have been around for decades, iBuyers have only existed since about the mid-2010s. They are defined by their use of algorithmic technology to make quick offers on homes and their ability to provide a mostly online experience for their clients.
Well-maintained homes
Another thing that separates iBuyers from other house-buying companies is the types of homes they purchase. Homes in terrible condition or that need a lot of repairs are unlikely to be a good fit for iBuyers. iBuyers tend to look for properties in good condition that fall within a certain price range, and usually pay closer to market value than most other cash-for-homes options.
Did you know? Offers from iBuyers such as Offerpad and Opendoor got sweeter for sellers in the pandemic’s fiery housing market. A February 2022 report from real estate brokerage platform zavvie found that iBuyer offers peaked in Q2 2021 at 104.1% of market value. However, according to CoreLogic, 2023’s softer market saw an 80% decrease in iBuyer activity.
Quick virtual offers
To sell a home using Offerpad, users go to the website and fill out a short questionnaire about their home. Then, you have the option to upload photos or take Offerpad on a 15-minute virtual tour of the home. Within 24 hours, Offerpad sends either a no-obligation cash offer or information about other options.
Take the cash
Homeowners can choose to take the cash offer on Offerpad’s website with the possibility of having a “backup” cash offer. The website caters to sellers who want — or need — a quick sale with minimal fuss. If you’re facing a sudden family situation, don’t want to manage home preparation, inherited a property from out of state, or need a quick move for another reason, Offerpad can offer selling solutions.
How does Offerpad work for home sellers?
Cash Offer
With Offerpad’s Cash Offer, you’re accepting the cash offer you received after initially contacting them. Some advantages to selling to an iBuyer include not having to perform repairs or upkeep, cleaning, staging, or showing your home. Homeowners who want a simple, speedy real estate transaction are often drawn to this solution.
Cash Offer lets you choose your closing day up to 90 days from offer acceptance, and might even give you three extra days to stay after closing. Offerpad typically performs a home inspection within 15 days of the purchase agreement, and may charge the seller a repair credit based on the findings.
Offerpad says that they’ll pay for a local move, too.
Are there any alternatives to Offerpad?
Opendoor operates in many of the same markets as Offerpad and may be an alternative where you live.
HomeLight’s Simple Sale platform is another option for selling your home quickly and with fewer hassles. With Simple Sale, you can receive a competitive all-cash offer to buy your home, on your timeline.
You can skip staging and repairs, and sell without agent commissions or upfront selling costs. Answer a few basic questions about your home’s condition, how much work it needs, and your selling timeline to get started with Simple Sale today.
Service fee: Some transaction fees apply. No hidden fees or agent commission costs, and requesting a no-obligation offer is free.
Locations: Available across most of the nation — input your address to see if we can provide a cash offer for your property.
Closing window: After we’ve collected key details about your home, we’ll provide a cash offer in as few as 24 hours, with the ability to close in as little as 10 days. You have the flexibility to pick a move day that works for your schedule, typically within 30 days of closing.
Below, you can hear about how Baohan Wu, a seller who used Simple Sale to sell his high-rise apartment, closed within three and a half weeks and what he thought of the process overall.
How does Offerpad work for homebuyers?
Offerpad also lists homes for sale in certain locations, and buyers can make an offer through the website. Buyers who purchase a home through Offerpad have flexibility with their move-in date and receive assistance from one of Offerpad’s transaction coordinators.
If the buyer is working with a real estate agent, the agent can send over the offer to Offerpad via email. Offerpad requires homebuyers to be prequalified for a home loan in order to purchase a home on their website. More information about this process can be found on the company’s buyer FAQ page.
Does Offerpad serve your area?
According to its FAQ page, Offerpad operates in more than 1,700 U.S. cities, and is regularly expanding. See an updated list of where Offerpad is active on the company’s website.
Is there a cost to use Offerpad?
Offerpad charges a fee of 5% of the sale price when using its Cash Offer program. For example, if the offer is $300,000, the service fee would be $15,000.
Additionally, it’s estimated that sellers will pay 1% in closing costs, which is standard for most real estate transactions. (An exception would be if you sold to a We Buy Houses company, which will often cover a seller’s closing costs in full). Offerpad says it does not charge fees to buyers who purchase a home on its site.
How does Offerpad make money?
Offerpad makes money in a few different ways, including service fees, rising home values, and repair costs. For example, Offerpad charges a 5% fee to sellers who sell their home directly to the company. Offerpad can also make money if the homes it purchases appreciate before they are resold. The company makes additional revenue from add-on services including mortgage, title insurance, and brokerage services.
Offerpad reviews
What’s it like to buy or sell a home with Offerpad? Online reviews* give some insight. Here’s what people are saying online about Offerpad.
Trustpilot: 2.7 out of 5 stars, with 184 reviews
Reviewers on Trustpilot raved that Offerpad saved them money and time, and they enjoyed a stress-free process and were given flexible deadlines. One negative review was posted by a customer who didn’t like that Offerpad lowered their initial offer by more than $10,000 after the home inspection. Another client was unhappy that the company wanted $17,000 of updates made on their home.
Sitejabber: 2.4 out of 5 stars, over 67 reviews.
Positive reviewers report that they had a great experience and appreciated the company’s professionalism and stress-free process. A few reviewers feel they received lowball offers. Buyers who posted say the minimal cosmetic changes that Offerpad made to their home were of poor quality, but quality levels may differ depending on the contractors used in various locations.
Better Business Bureau: 4.04 out of 5 stars, over 264 reviews.
Home sellers who left reviews with the Better Business Bureau (BBB) say that there were no glitches, everything went smoothly, and they received acceptable offers. A few felt offers were too low. Buyers who purchased homes from Offerpad expressed concerns over what they feel were poorly done repairs, leaks, or shoddy work. Others say that they tried to buy homes but had offers canceled without explanation, or that Offerpad didn’t communicate with their agents.
*Review notes as of October 11, 2024
Pros and cons of using Offerpad
Why would a homeowner want to use or pass on Offerpad’s services? Here’s a quick list of pros and cons.
Why sign up for Offerpad’s service?
- Sell your home quickly for cash. There are situations when your primary goal in a home sale is speed. If it’s time for an elderly relative to move into assisted living, and you need the money from the home sale to fund their move, a quick sale for cash is a good option. With Offerpad, you can sell and close quickly and receive cash.
- Avoid having to make repairs (or coordinate them yourself). As a home seller who needs a quick sale, you may not have time to make repairs or handle all the preparations needed to sell. Or, even if you have time and you’re able to fix and prep your home, the thought of managing it all might be overwhelming. With Offerpad or another iBuyer, you can sell without making repairs or you can utilize their services to manage them.
- Don’t have to keep your house clean for showings. If you have small children, multiple pets, or both, it’s hard to stay on top of keeping the house clean for showings. Plus, then you have to pack up the kids and dogs and go elsewhere while buyers visit your home. If you sell to Offerpad, you can skip this hassle.
Some cautions to consider when using Offerpad
- The offer may be less than if you sell with an agent. Offerpad’s all-cash offer can be quick and convenient. But their offer may be below the market value or less than what you might receive otherwise, especially in a hot seller’s market. If your home is in reasonably good shape, an agent may be able to achieve a higher selling price for the property.
- Some buyers felt repair work was done poorly. Some Offerpad clients posting buyer customer reviews have complained of issues with the repairs and improvements that Offerpad made before reselling the house. Your experience may differ.
- If you change your mind, you’ll pay a 1% cancellation fee. If you no longer need to sell, or realize you could make more money by listing on the open market, Offerpad may charge 1% of the contract price if you cancel after a signed acceptance of the sales agreement.
How do HomeLight’s seller and buyer services work?
HomeLight Simple Sale is also a cash buyer service, but we operate nationwide. If you work with Simple Sale, you’ll get a no-obligation full cash offer for your home in 24 hours. You can avoid paying agent fees and enjoy flexibility in selecting your close date. You can sell your home without having to make any repairs, stage, or clean it for showings. With Simple Sale, you can close in as few as 10 days.
A lot of times, sellers who need or want a fast sale think that a cash buyer is their only option. But an experienced real estate agent might still be able to sell your home quickly and get you more money than a cash buyer might pay. It’s worth the time to talk to a proven agent in your area to learn about your options.
Other services and tools offered by HomeLight
HomeLight offers additional services*, too, as well as more tools for home sellers.
- HomeLight Buy Before You Sell: What if you’re selling so that you can buy another house and move? In hot markets, it’s hard to shop for a new house if your offer has a sales contingency in it, and you might have to rent for a while before you can buy again. With HomeLight Buy Before You Sell, we give you a back-up offer on your home, allowing you to make an offer without a sales contingency, which makes your offer more attractive to sellers.
- HomeLight Agent Match: HomeLight’s Agent Match service analyzes over 27 million transactions and thousands of reviews to find the best real estate agent for you. After you answer a few questions, we match you to agents with specialties and certifications best for your needs. If you want an agent who specializes in waterfront real estate, relocations, or selling a home in probate, our Agent Match tool can search on these terms. In just two minutes, we’ll match you with multiple local top agents, not just one, so you have more options in your search for the perfect, proven agent to sell your home.
* Some services are not available in all states
Additional tools and resources
- Home Value Estimator: Want to find out how much your home is worth before accepting a cash offer? Our home value estimator analyzes up-to-date sales information for comparable properties and provides a ballpark estimate of your home’s value.
- Agent Commissions Calculator: How much will you pay in commission to an agent when you sell your home, and how does it compare to Offerpad’s fees? Our commissions calculator helps you figure that out.
- Net Proceeds Calculator: How much will you make selling your home? Use our calculator to estimate the cost of selling your home and the net proceeds you could earn from the sale.
- Home Affordability Calculator: It’s not a good idea to strain your budget, so how much house can you afford to buy? After answering a few questions about income and expenses, our calculator gives you a home-shopping budget.
- Best Time to Sell Calculator: If you’re trying to sell quickly and for the most money, when is the best time to list? The best time to sell calculator analyzes sales data where you live to determine the best time for you to list your home.
- Informative blog posts in the HomeLight Seller and Buyer resource centers give you access to expert advice, checklists, and quick tips.
FAQs about Offerpad
Here are some quick answers to common questions about Offerpad.
Yes, the company is a publicly listed company that trades on the stock market. Offerpad is accredited by the Better Business Bureau and holds an A+ BBB rating.
While you can cancel a contract after agreeing to sell your house to Offerpad, they may charge home sellers 1% of the contract price to cancel.
Sellers are responsible for closing costs, including taxes, HOA transfer fees, and title insurance, which range from 1%-3% of the total transaction.
It’s good to have options when selling or buying a home
Offerpad seeks to be a different kind of iBuyer, offering homeowners the chance to test the market, use their repair services, or take a cash offer and stay for a few days. They have good customer reviews and high ratings on numerous consumer websites.
The company might lower an offer if the home inspection reveals additional issues, but you can receive a fast, easy sale with Offerpad. An experienced agent might also still be able to sell your home fast and for more money.
Before you decide to work with a cash buyer, consider the pros and cons and review your options. It might be worth it to request multiple offers from several of these services, or talk to a top agent near you to see how quickly and for how much they could sell your home on the open market. When it comes to home selling, you have more options now than ever before.
Header Image Source: (John Vanderlinde / Unsplash)
At HomeLight, our vision is a world where every real estate transaction is simple, certain, and satisfying. Therefore, we promote strict editorial integrity in each of our posts.
